Rendell tied to consultants on lottery privatization

He works for firm advising Corbett. It stands to make millions on a deal.

Rendell (Bradley C Bower, AP file…)

December 25, 2012|By John L. Micek, Call Harrisburg Bureau

HARRISBURG — — As Gov. Tom Corbett considers whether to hand the reins of the Pennsylvania Lottery over to a British company, he's been getting advice from a firm with ties to his predecessor.

Former Gov. Ed Rendell is a senior adviser to Greenhill Partners, which stands to make millions if Corbett signs off on a private management agreement with the North American subsidiary of The Camelot Group, which runs the National Lottery in the United Kingdom.

Corbett has until at least Monday to decide whether to enter into the agreement with Camelot, which was the sole bidder for the $3.5 billion state lottery. Last week, the administration reportedly began talks on extending the deadline, but declined to explain why it was seeking an extension.

Rendell, who joined Greenhill in February 2011 to work on public-private partnerships and infrastructure projects, said that apart from telling the Corbett administration he didn't think it could improve the performance of the lottery, he'd "assiduously" stayed away from the deal and had not involved himself in Greenhill's dealings with the administration.

"First of all, I have a vested interest in the good work we did [with the lottery] and, No. 2, it's probably not a good idea for me to be involved in anything seeking a competitive bid from the Corbett administration," Rendell said.

Corbett's spokesman, Kevin Harley, also said he was unaware of any involvement by Rendell in Greenhill's dealings with the administration.

Greenhill could be paid as much as $30 million if the administration decides to award the management of the Pennsylvania Lottery to Camelot. The consultants would be paid out of the $50 million put up by Camelot, the state Department of Revenue has said.

Legislative Democrats have questioned why the Republican administration would spin off the lottery at a time when it is a national leader in sales and keeps costs low. The administration has defended its decision, saying it wants to maximize revenue for senior citizens programs. It has also said the state will retain ownership of the lottery.

Still, at least one good government advocate said Rendell's ties to Greenhill don't do much to dispel the impression of a cozy relation between big business and the politically powerful.

"The appearance is awful," said Eric Epstein of the good government group Rock the Capital. "Obviously [Rendell] has a right to make a living."

But Greenhill didn't hire Rendell "to be eye candy," Epstein noted. "They hired him to be a rainmaker and it's raining."

Corbett has faced increasing scrutiny of his plan to let Camelot handle the day-to-day management of the lottery. And a union representing most of the lottery's 230 employees has filed suit, charging that the administration does not have the authority to enter into the agreement.

At a news conference last week, Corbett sidestepped questions about the administration's negotiations with Camelot to extend the deadline for a bid. He also defended the administration's authority to enter into the management agreement without seeking legislative authorization.

"Right now we are evaluating it," Corbett said, adding that the administration must also consider a counterproposal set to be submitted by the American Federation of State, County and Municipal Employees.